Scottish Beer

It’s almost two weeks since the news broke that Innis & Gunn had acquired fellow Scottish brewery Inveralmond for £3.1m, forming the accurately named (if not quite as catchy) Innis & Gunn Inveralmond Brewery. The announcement surprised a fair few people (not least myself) and was a fascinating thing to have happened. In this modern era of brewery takeovers and buyouts you tend to think solely of macro-conglomerates buying into craft, but this was almost a touch of throwback brewery business, done at the local level and reminding you that when A buys B, A isn’t always short for AB-InBev.

It’s been a while that something similar occurred in Scotland, too. Off the top of my head the last time something like this happened was when Sinclair Breweries purchased the Orkney/Atlas combination in 2006, or on a smaller scale when the Isle of Mull Brewery sold to Oban Bay in 2010. These things don’t happen north of the border very often – so when they do they raise a huge amount of questions. That goes double when the buyer is a export-heavy brand with a fairly unique identity, and the buyee a cask-heavy brewery a year shy of twenty in the same location under the same management.

The press release issued on the 7th of April had a number of interesting points. One of the main ones for me relates to I&G’s BeerBond crowdfunding programme, which launched and closed last year. The target at the time was £3m, and the release states it was this money raised that is to be used to acquire Inveralmond. I’m wondering now if this was the reason for the funding in the first place – the plans released in May of 2015 to build a brewery in an undisclosed location sounded great – but as Innis & Gunn founder Dougal Sharp notes, “Taking over an already fantastic brewery gives us a rolling start”, and mentions the understandable difficulty of securing a site and building a brewery from scratch.

So was a buyout like this always the intention of the crowdfunding? After all, you can’t really issue a call to action to your fans on the premise of buying another brewery; the artists’ impression of a shiny new facility may have been a simple smokescreen. Not that it matters, I&G can invest the money raised in whatever way they like to further their business and whether the acquisition of another company was the result of the Bond or the intention behind it makes no difference in the end. It gets Innis & Gunn to production in a matter of a few short months as opposed to at least a years’ hard planning, construction and dialling in.

After reading the release, the other thing that struck me was pretty basic – this is going to really work for both parties.

Inveralmond receive investment whether they were looking for it or not (and they may well have been, it could be there was no smoke without fire). There’s specific mention of the brewing staff being retained by their new owners, which is understandable given the weight towards sales/marketing staff as opposed to brewhouse workers at I&G. The beer brands themselves are a perfect fit – the only beer I can see falling by the wayside is Inveralmond’s Sunburst Pilsner, likely to be usurped by the more POS-friendly Innis & Gunn Lager. Inveralmond’s range of cask ales are an excellent addition to Innis & Gunn’s keg and Oakerator® aged bottled beers – there’s almost no overlap.

I think the other reason why this will be a success for Innis & Gunn is that they can finally rally behind an identity. They can freely – and very easily – adopt the rural Perthshire character and end the frankly daft Edinburgh/Glasgow dichotomy. Look for the ‘brewed in small batches’ ‘Edinburgh, Scotland’ to be swiftly moved to something like ‘from the heart of Scotland’ instead. Innis & Gunn are as much a brand about Hunter wellies and Springer Spaniels as they are about the West End of Edinburgh and Harvey Nicks. The acquisition is a chance to rebrand themselves into something that finally makes sense; barrel-ageing, the great outdoors, Scotland’s larder etc – rather than the open non-secret Glaswegian brewery, Edinburgh offices.

And the Wellpark facility will presumably be mothballed – as the release mentions on a few occasions the desire for state of the art equipment, and a break from the past. “It [the Inveralmond brewhouse] gives us a home where we can innovate and experiment with some of the new brewing processes we’ve been dreaming up.” This is an eggs in one basket deal. Whereas the mooted stand-alone I&G brewery last year was to have been run in sync with their present home in Glasgow (and likely run more as a small-batch, visitor-friendly concern), when you’ve dished out over £3m it’s all going to happen in that one location. It’s good news for Perth, in that respect.

The only other loose ends are what happens to Inveralmond’s investment in the Usher’s Brewing Co site in Edinburgh – will this become another Innis & Gunn Kitchen? (their first in Edinburgh has been followed by a second in Dundee and soon a third in Glasgow). Also one of the stated benefits to Inveralmond of the buyout is the access to sales and distribution network they will gain, which must have come as news to Iron Horse Beverage, the ink still drying on a deal to distribute Inveralmond beer in the US signed off only last month.

The other issue is SIBA. Inveralmond founder and MD Fergus Clark has been a long-standing supporter of the Society of Independent Brewers, serving as a Trustee in the organisation that has in its Constitution the following paragraph: v. An independent brewer is defined as a sole trader, a partnership, a limited company or a public company, that is not a subsidiary of a larger firm with attendant or other subsidiary brewing interests. To my knowledge, Innis & Gunn are not SIBA Members, and on reading that I’m not sure if they can spin their recent purchase as a ‘partnership’ – unless of course the Innis & Gunn Inveralmond brewery apply in their own right to be a member down the line.

So, a few questions raised – but to be honest they are all pretty minor in the grand scheme of things. It will be fascinating to see how this is all going to play out – but on initial reading of the situation, with so little in common, these two breweries look to be a perfect match.

3 Comments

forhopssake

Excellent piece, Rich. I agree with you in that the 2 ‘breweries’ do seem an excellent fit and I’m hoping that we will now get a lot more interesting stuff c/o the creative mind Inveralmond head brewer Ken Duncan.

Graeme

April 19, 2016

I think it is unlikely that Inveralmond was privy to a plan to buy out a brewery using crowdfunding (if such a plan ever existed).

Inveralmond recently completed a rebrand (the first in years), finally got a separate cold store building, began the Inspiration Series, began barrel aging, and expanded their sales team. All of this happened during the time that the I&G crowdfunding project was in effect – if Inveralmond was aware of such plans they wouldn’t have continued with the majority of these projects.

Crowdfunding/investing in breweries is emotional rather than purely business minded, not unlike buying shares in your local football team – not done wholly for returns (even if these are offered) but because you are a fan. Therefore, I think it is unlikely that I&G would have started out the whole crowdfunding idea with the intent of pulling the wool over the investors’ eyes as this would alienate their fan/investors.

I think the most likely scenario is that Inveralmond happened to be looking for further investment and I&G’s plans for a brewery fell through. Rather than buying a turnkey brewery, I&G could buy a turnkey brewery with all of the wrinkles ironed out and a full complement of trained staff to operate it. Also, with the cold store relocated to a new building, there is almost double the floor-space which means a possible quadrupling in tank capacity. It was just fortuitous timing.

In regards to Sunburst Pilsner, this would be a sad loss. In keg form, it is the best Pilsner in Scotland. But having two pale Pilsners on your books would be a bit much for any brewery not specialising in Czech/German beers.

Three others that would be sorely missed would be Lia Fail – a great Scottish beer (I happened to write a review on this beer back in 1996, the first online review of a Scottish beer), De Mons and Rascal Porter both amazing on keg and both very close to my heart.

It remains to be seen what will happen to Usher’s. It isn’t a 100% Inveralmond concern. The brewkit is brand new and hasn’t be fully utilised over the past wee while. It could be that Usher’s ends up being another “Craft Beer” bar without the brewery aspect. Another I&G Kitchen could be a possibility but unlikely. The next 6 months will probably be crucial in deciding its fate.

As for SIBA. I think the only resolution is for the new company to rejoin. The distribution afforded by this alone makes it worthwhile.

As an aside, I know that Fergus would not have entered any deal without first having assurances that the staff would not suffer.

I agree that it is a rather good match. No one is stepping on the other’s toes. I hope that both brands keep their individuality though.